The fall in global crude prices is hurting the Porsche dealer in Lagos, where Nigerians with fat wallets would roll in during the good times and roll out in luxury cars with sticker prices starting at $100,000, BBC reported.
Now the showroom is deserted. Sales were down 50 percent in 2015 compared to 2014, said managing director Parvin Singh in a BBC interview. He blames the crash on crude oil crisis.
Oil and gas and oil sales account for about 15 percent of the country’s GDP but the industry has a disproportionate effect on the economy as a whole. Oil revenues account for 75-to-80 percent of the government’s budget.
“The government is Nigeria’s biggest spender,” Singh told BBC. “When the government stops spending, it has a cascading effect on the corporate sector.”
Africa’s leading economy grew by 3 percent in 2015, its slowest pace in more than 10 years, according to an International Monetary Fund report in January, Mail&Guardian reported.
President Muhammadu Buhari won the presidential election in 2015 largely on a promise to end the corruption that has long plagued Nigeria. Buhari has squeezed the flow of public funds in an effort to clean up Africa’s biggest economy, NewYorkTimes reported.
He has ordered government ministries, agencies and departments to consolidate bank accounts for closer monitoring of financial transactions. He has made arrests to retrieve stolen money and overhauled management of the state oil company. He’s no stranger to an industry where he held key positions in the past.
Private jets that used to crowd the airport in Abuja have been grounded, their wings clipped by the new government’s crackdown on corruption, NewYorkTimes reported.
At Royal Choice — a gated community of villas selling for up to $1.8 million each — customers often bought villas in cash in the previous administration. Five months after Buhari took over, Joshua Bialonwu reported he hadn’t made a single sale.
Nigeria expects a budget deficit of $15 billion in 2016 and has asked African Development Bank for a $1 billion loan to support the deficit, AfDB said Tuesday, according to a Reuters report.
Nigeria wants to borrow as much as $5 billion.
Earlier this month Finance Minister Kemi Adeosun said that about $4 billion might come from international institutions and the remainder from eurobonds.
Despite the pain caused by the oil price crash, Nigeria is a far more resilient economy than many observers give it credit for, said Bex Nwawadu, CEO of Lagos-based private equity firm CBO Investment Manager.
“The local economy, ex-oil is actually pretty robust,” he said in a Forbes interview.